The centrepiece of Budget 2015 is a package aimed at reducing child ‘hardship.’
Worth $790 million over four years, the package has $25 per week increases in both benefits and student allowances for families with children, a modest increase in Working for Families for low income families, and an increase in the Childcare Assistance rate for low income families.
The package comes with new obligations attached; based on the government’s belief that getting beneficiary parents into work is the best way to reduce child hardship.
Most sole parents and partners of beneficiaries must be available for work when the child turns three, rather than five as at present, and all beneficiaries with part-time work obligations will be expected to work 20 hours per week rather than the current 15 hours.
Beneficiaries receiving Sole Parent support will now have to reapply for their benefit every year.
There are new measures to tackle child support debt and encourage parents to pay what they owe for their children. Some or all of the penalty debt will be forgiven in certain circumstances (such as where liable parents are meeting current payment requirements).
For homebuyers and investors
On the demand side, a suite of tax measures announced ahead of the Budget requires all buyers and sellers of property other than the family home to provide an IRD number.
This imposes identity requirements on non-resident buyers and introduces a new ‘bright line’ test that will typically see investment property taxed for capital gain if on-sold within two years. A withholding tax on non-residential investors is also being considered for introduction in mid-2016.
On the supply side, Budget 2015 includes $52 million to facilitate housing development on Crown-owned land in Auckland, $35 million to support the Social Housing Reform Programme, and $48 million targeted at improving Maori housing outcomes.
The Crown has also previously announced that the Tamaki Redevelopment Company will build around 7500 new houses in East Auckland.
There is a new Border Clearance Levy of around $16 for arriving passengers, and $6 for departing passengers, to fund passenger-related biosecurity and customs activities.
The Budget provides for reductions in ACC levies worth $375 million in 2016, and additional $120 million in 2017. It also envisages an increase of $80 million over four years to R&D growth grants. Private Research Institutes will receive $25 million over three years to fund their research programmes.
KiwiSaver incentive goes
The Budget seeks to remove the ‘kick-start’ incentive payment of $1000 under KiwiSaver Scheme, although there is no change to the annual government subsidy or employer contribution rules.
These changes do not affect existing KiwiSaver holders and, with 2.5 million New Zealanders already signed up, the Government’s assessment is that removal of the kick-start payment will not substantially change the uptake rate.
Finance Minister Bill English has announced an increase of $1.7 billion over four years for public health services, particularly targeting elective surgery, palliative care, orthopaedic conditions and bowel cancer screening. He has also increased about $50 million to develop Whanau Ora. The Budget provides $8.5 million for intensive case management of beneficiaries, as a part of the government’s ‘Investment Approach’ to social spending.
Early Childhood, Primary and Secondary Education will receive $63 million over four years for special education, a 1% boost to school operating grants, and 300 extra Trades Academies places. This would be a part of the new spending of $443 million.
Tertiary Education will receive $112 million of funding, targeting tuition at degree level; and raising the profile of engineering growth in Maori and Pasifika trades training among other measures.
Mr English has allocated $100 million capital for rebuilding science facilities within the Lincoln Hub Redevelopment Programme in Christchurch.
The government will spend an additional $108 million over four years to support progress in developing the Anchor Projects. KiwiRail will get additional capital of about $200 million per year over the next two years, while regional highways will receive $97 million. Budget 2015 has also allotted $52 million to replace the Waitangi Wharf on the Chatham Islands, $40 million for urban cycle ways and $40 million capital investment in Te Papa’s buildings.
Chandan Ohri is IT Advisory & Consultancy Partner and India Market Leader at KPMG based in Auckland. KPMG New Zealand is the Sponsor of the ‘Best Accountant’ Category of the Indian Newslink Indian Business Awards 2015.